Can’t buy me love

Worth only ten bucks earlier this year, it’s just touched a thousand. That makes a Bitcoin the hottest financial asset on the planet right now.

The digital currency has lured the tuna-and-toiletpaper set that grew disillusioned and tired with gold. Anarchists and iconoclasts love them because Bitcoins owe allegiance to no nation or central bank. They are perfect for those awaiting, or impatient, for the collapse of America and capitalism. They’re ideal for druggies, terrorists, tax evaders and money launderers. And, of course, those speculating in them have made out like bandits.

Bitcoin is a currency used to buy stuff from retailers, drug dealers, hookers or assassins who accept it, plus it operates as a payment system like PayPal. It was born out of the 2008 financial crisis and runs on an elaborate global network of host computers without a central control agency (like the Bank of Canada, which dictates the supply of dollars). Many think it will evolve into a world payment system and an alternative currency free from the surly bonds of any country’s tax system.

In short, could Bitcoin be perfect?

Paul ain’t so sure:

“I’m one of those people that straddles the Gen X/Y border. As such, I have a bunch of moron friends who think that Bitcoins are worth an investment and that they are the way of the future,” he writes me. “Funny enough, some of these guys are the same who said gold and silver were worth holding. Can you please help me cut them down to size? Ultimately I don’t carry the same clout you do, nor can I write it with the same eloquence.”

Actually Bitcoins have traction. There are 12 million in circulation, and while you can create or ‘mine’ Bitcoins if you have enough computing horsepower, they’re designed to inflate less quickly than technology advances. So, like precious metals, there’s a finite, rationed supply. Bitcoins are virtual money when they act as a borderless, frictionless, instant, global medium of exchange.

In many ways, it’s digital gold. If that sounds even more quixotic than the real stuff, you get it. But while Bitcoin commerce is immature and seems more like romanticized piracy than Wal-Mart, it just took a big jump towards the mainstream. That happened two weeks ago when a US Congressional panel held hearings into the utility of digital currencies, and even heard some kind words from Fed boss Ben Bernanke.

“While these types of innovations may pose risks related to law enforcement and supervisory matters,” he said, “there are also areas in which they may hold long-term promise, particularly if the innovations promote a faster, more secure and more efficient payment system”. Wow. Sounds legit, almost.

No conclusion was reached in Washington, but the FBI recently shut down the most prominent Bitcoin commerce site, Silk Road, for selling illegal drugs, arrested its founder and seized 30,000 Bitcoins. In other words, Big Government and Big Law aren’t about to let a cryptocurrency circumvent all those regulations designed to keep us ruly.

Ironically, all this has massively inflated the value of a Bitcoin. As I mentioned, it just hit $1,000 for the first time, which is cool if you bought in at $186 a month ago. It could go higher, the Internet being what it is – full of weird people who trust anonymous, peer-to-peer, unfiltered, unregulated transactions more than they do the money they pay rent with. But it could tank at any moment, too. In fact, it has in the past. Spectacularly.

So it’s volatility which turns Bitcoins from money into a speculative commodity. Anything that bounces around this dramatically is no storehouse of value, which has been a traditional role for gold. As for being a viable currency, forget it. How could you possibly conduct a serious retail business selling heroin or AK47s when your medium of exchange was so wonky? If you sold stuff for a few Bitcoins and the price collapsed a week later, you’d be whacked. If the buyer paid in digital coins which then doubled in value, he’d be screaming. Without a central bank trying to control the money supply, inflation, deflation and borrowing costs, chaos wins. Bitcoin loses.

That means only convert if you’re a specker who understands the value could be $10,000 or zero next year. Also realize if Bitcoins actually do form a bigger part of ecommerce, they’ll end up being regulated and controlled by the same authorities that print pictures on paper and let you buy lunch with them.

Having said that, digital money is a certainty. We’re almost there already. When was the last time you actually went to a bank or a machine to get cash? From earning to spending money, most people never touch actual bills. Now with smart phones storing money, credit cards you tap and ubiquitous online shopping, the entire concept of currency has changed. Bitcoin’s just a radical version of that, stripped of control, stripped of discipline.

“How could you possibly conduct a serious retail business selling heroin or AK47s when your medium of exchange was so wonky? ”

Garth, Garth, Garth. It’s risk vs reward, just like you keep telling us. The risk of the government seizing your profits and throwing you in jail is less with BC, so *some* people find that even with the volatility of BC, they still make more money than with real money (ahem.)

Of course, others prefer bitcoin because they are idiots. If you’re not trading in contraband or big into gambling, it’s just not worth it.

Finally something we agree on. Seems to me the mining of bitcoins is a waste of energy -not very environmentally friendly as you literally convert energy to bitcoins using specialized GPUs. In the end the only people making money will be the ones selling the hardware and a few who got in early.
Kilt.

Any form of currency is on thin ice right now. The Canadian dollar is starting to fall hard with no sign of slowing down. Painful inflation coming. At least we got next to zero interest rates. Ignore numbers and just go get all the stuff you want. There will only a day of reconing for those holding onto cash or other financial assets tied to worthless currency.

Yes, gold and silver under 5% I can understand. I don’t hold any, but I understand it. I like balance, diversity, and liquidity, as well as being debt free. Do I hold Bitcoins? No, do I regret not buying them? No. Like you said Garth, Bitcoins could blow up in my face at any time. To me, they are incredibly “High Risk”. Hindsight is always 20/20, but in today’s world, financial illiteracy reigns supreme. For me, following Garth’s advice ranks as “Financial Sanity”, meaning I am not going to have my gonads put in anything resembling Bitcoins/Insanity vise that could crush them.

“Stripped of discipline” – that is a good one! But hey, all that fiat money printing going first to the well connected resulting in wealth gap not seen since the days of European aristocracy means we get discipline, they get the proceeds.

God forbid the “little people” try to circumvent the FIRE sector’s toll booths wherever they go. Bitcoin is an alternative – something that people who don’t have connections to the Fed’s discount window are hungry for.

Will the political and economic elites shut it down? You bet! But they can’t shut down the idea and that must be a frightening prospect. Imagine that people had a choice.

I was just thinking Money can’t buy me love….after all the saving I went shopping today…I will love all what money can buy me…..got a 70″ Sony tv and a new laptop…cash all cash no debt….this love will do…..2014 motorcycle next on my love list……oh I am renting if it matters. And retired in my 40’s. I am not bragging just on the same page as the blog.

Boy people are so stupid. Do they really think in a currency collapse they will be out there trading bars of gold and silver or have computers trading vapor currency.

If you think the world is coming to an end, there is only one asset to buy – productive land with a sheltered home with root cellar and water source and off grid utilities and a machine gun turret, maybe even a tank cause thats the mad max scenario that will play out, not some utopian shiny metal or virtual currency exchange.

Currencies can collapse at any time and do from time to time. Governments and ‘Central Banks’ are politically motivated to stay in power and the rest of us are supposed to just get in line and follow the orders??

The world is changing as it always has and will; it’s just changing faster now. If history has proved anything it is that the class below the haves (most of us) always are the ones lined up at the bank looking for pennies on their hard earned dollars when they get the news a day late.

Our financial system is in a mess and we know it. Tomorrow could bring disaster and just suggesting a collapse makes you a ‘doomer’. I’m not a doomer but I’m also not an idiot (despite what my wife says).

It’s best to keep an open mind in changing times and pay attention to all the signs.

I agree we should be liquid, own a bit of gold and don’t rely on assets that depreciate as your financial plan.

Yes gogo, please enlighten us on the virtues of bit coin. A so called currency with less than 5 years of existence to be a viable exchange rate mechanism for local and international commerce fully endorsed by governments worldwide.

bitcoin is designed for whiners who blames government for everything that’s wrong with their lives …
frankly if your idea of value and its preservation can bounce from physical metal in your hand straight to bitcoin which is not backed by anything at all, you’ve got bigger problems than the government.

So I have a flat last weekend – 1 cm slice in the tire. Now I pack extra tubes, but how can I fix the slice so that the tube doesnt herniate thru it when I pump to 100 psi??

I take out a new polymer $20 (always have a little cash and ID when riding – and my helmet too!) fold it a couple of times and place it on the inside of the tire at the slice.
Insert new tube, pump away and presto – no tube
hernia!

3. british billionaire sir richard branson said his company Virgin Galactic is now accepting the bitcoin–apparently, it ain’t just for back-alley “hookers” and “dealers”

4. maybe the canadian dollar is “stable” enough for YOUR business transactions, but there are MANY people in the world who live in places that do not share this privileged position

5. comparing bitcoin to “credit cards you tap” is to misunderstand the very nature (and power) of the crypto-currency itself

6. essentially, bitcoins represent the emergence of a true, free market, i.e., capitalism–a paper currency that is “controlled” and “disciplined”, as you say, by governmental entities is freedom’s antithesis

7. america is NOT it’s money! america is a philosophy: a society based on the preservation of individual freedom.

i very much doubt that there are bitcoin proponents “awaiting, or impatient, for the collapse of America.”

in fact, people who push bitcoin are in many ways calling for the exact opposite: they are seeking the RESTORATION of america and free-market capitalism (not a collapse of it)…through bitcoin’s free and unconstrained economic ecosystem

8. whether bitcoin rises or falls in the coming years remains to be seen; however, EVERYONE who understands (and loves) freedom should at least appreciate the fight

Any “currency” that fluctuates 1000% in a few weeks cannot be used for legit commerce. However, if they figure out the instant conversion in/out of bitcoin, I’m sure it will catch on even more. The guns & gold crowd will go pretty far to hide transactions from the government.

#26 Snowboid on 11.29.13 at 11:07 pm
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Love the last line in that ad, “as an investment this unit has rented up to $2000”. Meaning, at best, you’re probably looking at $1800/mo, and that means the long term trend value of that unit is probably ~$430,000 (P/E ratio of 20). Also meaning that the original list price was at a P/E ratio of about 40….mind boggling.

A much better buy at this time is LiteCoin. Up from 25 cents to 22 dollars. I had the opportunity to buy Bitcoins in their infancy along with LiteCoins. Just like housing never did take the plunge. Now its Makers Mark and Coca Colas every evening to dull the pain. Lite Coins folks. Bottoms up

Not true. The technical design of Bitcoin does not preclude government influence.

If regulators persuade a majority of the user-base to adopt a particular rule, then that rule becomes entrenched through the public block-chain.

It is very possible that such an event would occur since a majority of the world’s wealth (and Bitcoins) exists in just a few countries.
———————–
If the regulators could do anything about it they would have done it by now. Unfortunately there is nothing they can do about it.
Why don’t you give us an example!

———————-
You might be comparing apples to oranges here. PayPal serves a different purpose than Bitcoin. For starters, no one “mines” for PayPal coins.
———————–

Dumbest thing I ever read about Bitcoin
I thing you do not understand in what sense Bitcoins compets Paypal.

#42 Bottoms_Up: Love the last line in that ad, “as an investment this unit has rented up to $2000
===========
Yeah, read that too. Implies it has also rented for less than $2k. Considering that at 20% down, you’re still financing $480k. At 3% over 25 years, the mortgage payment is over $2275 monthly. So you’re in negative cash flow even before condo fees, maintenance, etc, on a declining asset to boot. Sounds like a hell of an ‘investment’.

Thanks Garth, I thought you were about due to make fun of bitcoins again.

This was surprisingly balanced, although I noticed how often you chose to mention hookers, guns and drug dealing.

It was great that I could wire money to my brother across the world for free using bitcoin two years ago. The fact that the dregs of that gift are now worth $3000 to him is a bonus.

Also, note that many businesses that accept bitcoin set their prices in their home currency and sell the bitcoins as soon as they receive them. This goes a long way toward mitigating the volatility problem.

Also, the bitcoin market cap is now several billion dollars, and the volatility is gradually reducing. A few more years and bitcoin might be a store of value rather than a speculation.

I tried to make bitcoin %5 of my portfolio, but it is not cooperating at all. It is closer to %20 and rising. I will rebalance if it hits %25, but I don’t see any end to this yet.

My thoughts are that bitcoins are the result of excess liquidity in the system. If interest rates were priced at normal levels, people would not be inclined to speculate on overvalued assets, useless currencies, and unproductive assets (homes, precious metals, and speculative companies).

How do you gain from purchasing a bitcoin other then selling it to another great fool?

The excess liquidity (cash) needs to find a home in market, hence the flow of cash to bitcoins. This is no different then dot-com bubble or US real estate bubble. The soon to be realized US bond bubble. The financial markets manufactors these bubbles every 4 – 6 years to soak up excess liquidity and squash inflation. This is an irrational market combined with euphoria and greed — pain and fear is soon to follow.

NEVER invest into anything that you can’t easily value or don’t understand.

NEVER invest only for the reason the price today is higher then it was yesterday, week, month, or year ago.

Boy people are so stupid. Do they really think in a currency collapse they will be out there trading bars of gold and silver or have computers trading vapor currency.

If you think the world is coming to an end, there is only one asset to buy – productive land with a sheltered home with root cellar and water source and off grid utilities and a machine gun turret, maybe even a tank cause thats the mad max scenario that will play out, not some utopian shiny metal or virtual currency exchange.

__________________________________

I am not a doomer but I bought a bunch of guns and a gun locker when I saw what morons out there possess firearms in Canada. Just a heads up for all you Canadian fools who think it is only Americans that love guns–you are dead wrong. There is a HUGE gun subculture in Canada. Do you want to be the only one on your block without a gun when TSHTF? I have a few thousand rounds of ammo and the Rambo trilogy on standby too. I always feel like it is money well spent. I also stockpile a few weeks of food and water and some #10 cans of beans. People prepare for all kinds of things, but how many of us have ever prepared to spend six months without grocery stores or electricity? Think about it. You don’t need to be a doomer to prepare. At times like this silver and gold could be useful, but so will salt and toilet paper (especially if you are eating beans). Do I believe in doomsday? Not at all, but I am a realist, strange things do happen, just look at Bitcoin.

Speaking of Bitcoin. I think it will gain legitimacy and end up on the front page of Time magazine. If I had the money and the know how I would buy into Litecoin right now (sounds really complicated). I think this stuff will hit the stratosphere. In my limited understanding digital currency is the new frontier and Bitcoin is simple, elegant, and stunningly beautiful in its inception.

No one is making clear sense out of what used to make sense in the markets in particular and what used to make sense in the direction mortgage rates are headed.
With doublespeak economic/market data running rampant …… those who appear(d) to be right based on previous reliable indicators will likely (most assuredly) be proven wrong.
As the misguided who appear to always be wrong about the direction we are headed in become the ones who make more sense in a world that has long stopped making much sense …insanity becomes sane and what was considered sane is then obsolete.

Smoking Man, I’m with you. A few Imperial Stouts into the west coast evening and I’m growing bolder by the sip. I’ve got £113,000 sitting in the UK invested in various shares and ETFs. I’ve been wondering when / whether to repatriate the cash to Canada now that I’m back and whilst studying charts tonight and thinking about the macro economic backdrop of Canada vs the UK it seems now crystal clear to me now that the Canuck buck is going to keep dropping and the crapped upon Pound is startign to claw its way back up. Soon Carney will finish QE in the UK and interest rates will start to ever so slowly trend up and so will the Pound and the Loonie will trend down as commodity prices keep dropping and housing eventually drags this economy into the loo. So the path is clear: I’ll stay long Sterling and FTSE shares and wait for the exchange rate to boost my money. With luck we will return to the bad old days of a decade ago when I moved to London and a Pound was costing me $2.44.

So, here in Edmonton, it was supposed to be different. Plenty of highpaying jobs, low taxes, and last I looked across the prairie, no shortage of land.

Prices here have been quite stagnant for the past three years, still high, but not moving higher on speculation any longer. We only need one more set of burning railcars in Canada to shut this place down.

That said, im a bit amazed and confused by these high SFH prices. Here it makes sense, the market here can bear these prices, but this time of year nothing moves.

But why, when I compare simmilar mid-tier homes in Edmonton AB, Kingston ON, and Halifax NS, do I get simmilar asking prices? There’s no rationale for it. The payscales and employment are so much better here than there, while the weather is colder. Seems like a bubble built less on selling a home for what its worth, and more of selling it for what you think you can get.

I note also some global changes, which have been coming for decades. There appears to be less growth in corporate globalization, but more of a reemergence of imperialism, as was the case a century earlier.

Sabre rattling of China and Japan, EU economic conflict with Russia, importance of Iran in world politics, possible disintegration of the UK, sans Scotland…. and this is after a decade of conflict in Iraq and Afghanistan by the world’s powers.

All news is recent, but these aren’t headlines you would have expected in the mid-90s. This could point to a change, particularly in how it may affect commodity prices, in what is a commodity and now condo country.

as some folks try to move away from manipulated currency we will see the use of bitcoin spread.The monopolized private issuance of state currency and credit has created the need for bitcoin,this has legs….and with the vast amount of liquidity sitting on the sidelines bitcoin can only grow.

#32 Herb on 11.29.13 at 11:23 pm
One of the joys of renting right now is being able to engage in the old-fashioned activity of writing a cheque every month.
……………….

I seldom write cheques, except for donations, sending a couple of family members money at Xmas, etc. Running really low so placed an online order for cheques w/my bank. Never rec’d them. Called HO about another problem & also mentioned my cheques. Lady waived the fee & said they’d send 100 cheques to me. We’ll see.
I hadn’t been to our bank for 3/4 years until I had a problem this fall. Have a safety box there & can’t even recall exactly what we have in it. Can no longer claim it on taxes now. I pay all the the monthly bills, etc. for hubby & I on line, responsible for all paper work & ensuring our taxes are done, etc. He takes care of techie, etc. stuff.

I’ve been following bitcoin for about two or three years now. I am short term bearish long term bullish on bitcoin.

Bitcoin gets its value from its usefulness. You work hard, earn some dough, convert to bitcoin and then what? Gamble. Buy drugs. Pay for a web server. You can also settle your debts with your Chinese associate who lives in mainland China who also happens to have access to a very liquid bitcoin exchange. You can do the same with your buddy in amsterdam. And more coming soon. Anyway I digress. Bitcoin is useful therefore has value.

Speckers have driven up the price because they see future potential. The bitcoin protocol has support for many crazy things that are still being worked on. For example, distributed contracts which could make possible, among other things, a decentralized bond and stock market. So bitcoin is going to be more useful in the future, therefore speckers buy.

Why I am bearish is that while i think bitcoin is imo worth at least what it is now, the run up has been too quick and it seems some p eople are ignoring the challenges bitcoin faces to get to distributed markets, micropayments and other useful things of the future. Scalability. Security. Those were the two main challenges identified by Gavin andresson at bitcoin 2013. I would add volatility to make it a nice triplet. Surely there are more. So awhile there is an immense number of people who surely don’t get it and are merely in the game because the game has been rewarding so far, there is a core group making bitcoin more useful everyday. So the price might crash, and there might be chaos for awhile particularly as miners try to justify reduced revenue. Once the dust settles, if bitcoin is still useful then its price will recover.

What happened around Nov 20 was business insider published an article with the headline: bernanke says bitcoin may hold long term promise. This was taken out of context but came out of a very optimistic senate session on bitcoin. Regulatory risk. Reduced. Celebrity endorsement (but not really) Hence, bitcoin soared. Interesting though that in the lead up to Nov 20 there was already a lot of buying happening. Can you say insider trading? Yes, snowden has made me more paranoid than I would have thought prudent just one year ago.

If not the future of finance, it is certainly the prototype to whatever is next.

Yeah Bit coins are a great idea ! Let’s see we invent a currency that has no physical presence which is distributed by a world wide electronic communications grid which currently is a kin to the wild wild west and we expect it to end well !!!???

So, let’s get this straight. You sign up for a bitcoin account so you can begin amassing bitcoins and trading them for goods in an electronic environment. To load the account or purchase bitcoins, you must connect your existing bank account… An account that uses currency backed by a central bank. Then, you decide how many bitcoins you want in exchange for that central bank-backed currency at a rate that can be extremely volatile. In other words, the life of a bitcoin is a currency that itself relies on the existence of central-bank backed currencies. Wow, the irony and hypocrisy of it is overwhelming. Sheesh, someone is getting snowed, and it isn’t the powers that be at bitcoin. I’d be curious how those powers are spending their copious mounds of newly-found, central bank-backed currencies. Or, are they just buying more of their own poison and buying houses and cars. Yeah, didn’t think so.

“When was the last time you actually went to a bank or a machine to get cash?”

Last week.

Sometimes for lottery tickets – these are what I call my “high risk investments” and make up a very, very small part of my portfolio. ;)

Sometimes to pay for purchases in cash, for the transaction to feel more tangible, and remind me that I’m spending actual money, not just little numbers on a monitor. Brings me back to my younger days, a time when most purchases were done in cash, and when I was watching every penny spent.

I can’t use plastic to buy tickets for my kids’ various events or fundraisers, pay for pizza day, dress down day or field trips.

And finally, at the pharmacy, where I do feel those purchases are private and nobody’s business. Screw the “points”.

Garth, I am no doomer. I don’t buy bitcoins or gold or silver or guns. I own farmland, ETFs and a house.

But just take a look at some of the videos from Black Friday shoppers and see what happens when people feel desperate. Thats just fighting for sales. Imagine what it would be like if they were fighting for food stamps or actual food.

You say 80% of the population couldn’t find $10,000 for an emergency. Well 99.999999999% of the population couldn’t last more than a few days if the economy blew out and the store shelves went empty. There is a case to be made.

Bitcoins. Anything can serve as “money” as long as people believe in the choice – be prepared for the loss of faith. Oddly enough, I attended a social gathering of Libertarians recently as I do think governments are a necessary evil to be kept as small as possible. I met one young fellow who was buying Bitcoins on speculation and asked me if his profits would be taxable. I advised the law of our land is all income/profits are taxable and he should consider his speculation results as capital gains or, heaven forbid, capital losses.
His real question was whether Bitcoin activities should be reported to the Canada Revenue Agency (CRA). I am of two minds when it comes to the taxation of capital. Personally, I hate it because it makes the Income Tax Act complicated and taxes initiative. On the other hand, why should someone who only earns employment income pay more taxes than someone whose income includes capital gains? No easy answer here as capital gains involves risk but overall I do think they should be subject to taxation.
From my point of view, speculating is a zero sum game at the national level and the CRA is wasting its time other than appearing to fair to all. For every gain, there is a loss but bubbles and inflation distort this picture. I agree that to make society function there must be rules therefore there is a cost that everyone must equitably bear according to their ability. As much as I despise reporting to the CRA and being defrocked, the CRA is only a tool of government programs. I wish for fewer bureaucrats to protect the public purse and I think the answer lies in smaller government.
To this opinion, I was asked how I could achieve such a result. I argued the answer would be to reduce the human population to less than a billion worldwide and then make the individual more important than institutions/governments – first allocation of resources and technology would be to individuals plus we have 60+ years to implement. I thought it was an idea to be explored but those who listened to me, not so much.
I also think the capital gains exemption for a principal residence on the death of a Canadian should be disallowed (gotta say something to keep my post onside with the purpose of this blog site).
For anyone interested in preferred shares, I found this article on the internet – it has a good explanation of terms. I don’t think it will be long for free viewing.http://www.raymondjames.ca/Branches/premium/pdfs/preferredsharesreport.pdf

I remember after 9/11, Western governments wanted to crack down on hawala, the Islamic world’s equivalent to Western Union, because the bad guys could use it to move money around. I wonder how that ended up?

Which brings us to Western Union itself, which has long been fraud artists’ favourite way to transfer money quickly, cheaply and anonymously.

The goldbug argument for the value of gold usually boils down to a circular one: Gold will remain valuable because it always has.

Speaking of gold, I can remember when online gamers raged about “Chinese Gold Farmers,” who would sit in front of a computer screen doing mindlessly repetitive tasks to accumulate in-game currency which they’d then sell to Western gamers for real currency because the job paid better than real world alternatives.

So what does bitcoin bring to the table that we haven’t already got? There’s nothing unique about it as can be seen by the profusion of copycat cryptocurrencies. To the extent that you need to securely and instantly transfer a quantity of money elsewhere, you can use bitcoin as a token. So you buy some, sent it somewhere, and the recipient sells it again. Sounds like what is needed is a simple loan, but what are people going to pay to borrow bitcoin for ten seconds? Service fees. Which might make bitcoin valuable to the extent that it can be used to generate service fee income… Except that if it got too expensive, the money-shipping organizations would just use a different cryptocurrency. When a new casino opens in Las Vegas, it doesn’t buy its casino chips from an older casino, it just has new ones made.

This sucker’s going down, just like Beanie Babies did. Here’s where the smartest people in the world meet the dumbest people in the world to do business:https://btcjam.com/listings

Anything that removes centralized government control away from a substance utilized by the general populace is a good thing, for it is the greatest criminals who exist in government and the banking system.

You’re right, Garth. Deflation is winning, which is why the Fed and other central banks will be forced to pump previously unimaginable amounts of stimulus into their economies in the near future. This isn’t some crazy gold bug theory.

Europe is in dire straights, China is dealing with overheating and credit excesses worse than what the U.S. dealt with in 2008. The U.S. economy is stalling thanks to the spike in rates last summer. It won’t take much more to trigger a bust given the fragility of the system. The 2008/9 downturn was foreseeable as is this one. No need to be looking for Black Swans. Normal cyclical forces are the likely trigger. The signs are all there, but too many investors are caught up in the hype of all time highs in the general and speculative markets like Bitcoins. An economy on the verge of deflation, one weighed down by excess debt, is quite different from the inflation-driven cycles of the past. Those differences are causing economists and investors to overestimate the endurance of this cycle and to underestimate the imminent risk.

Please help me.
I am a very rich Nigerian Prince and I need you to hold my Bitcoins for me on your computer. If you would be so kind to help me I will let you keep 10% of my Bitcoin stash which is equivalent to $12.3 million dollars.
Signed
The performer previously known as “Nigerian Prince”

bitcoin is a pyramid scam, nothing more. If you are a sucker you will say it is finite, so it is not a pyramid scam, however it is infinitely divisible so, while finite the pyramid grows by increasing value of the coins, which then are subdivided.

as far as being money, money has 3 functions:
1. as a unit of measurement of exchange value
2. as a medium of exchange, and
3. as a store of exchange value for future use

Bitcoin doesnt really meet any of these criteria so it is not money.

the real issue is that our current money doesnt meet these criteria either. basically we have redefined money in 1970 to have different requirement:
1. capable of being taxed on transactions
2. constant deflation tax
3. taxed on transfers
4. a means to control global exchange by fixing exchange rates.

the real solution is commodity backed digital exchange, with a digital commodity currency supported by holdings of stable commodity classes, ie grain, wood, coal, oil, metals(stable only gold and silver may not be suitable), labour, electricity, cotton etc. this would be the truest form of ideal money.

Think of it like going to the horse races. You go to your favorite track and put down $50 on ‘Pony Express’. You know that you have a 98% chance you will lose all of your investment but you are simply doing it for fun.

Well, guess what; your horse natually loses, and your money is gone. SAME THING WITH BITCOIN; it’s just like gambling on a horse race. Don’t bed more than you can afford to lose. However, if you want to bet $50 to $5000 on something you almost certainly will lose, here are some charts of bitcoin:

Now here is some important information you can really use to protect yourself:
If you use a Windows 7 computer, make a backup image of your computer so that you can fix it ‘WHEN’ you catch a virus or malware you cannot remove.
(This happens more often then you can imagine).

Here is how you do it:
Step 1 – Connect an external Hard Drive that has enough storage capacity to hold the ENTIRE contents of your computer’s hard drive.

(I don’t store ANYTHING on my computer’s hard drive, only system programs. I keep all of my data and photos on external hard drives / USB flash drives, so I only need 50 GB of storage on the external HD when I create a System Image.)

Step 2 – Open up ‘Control Panel’
– Backup and Restore
– Create a System Image
– Select the HD where you want the backup to be stored onto ( select the external HD from the pull-down menu ).
– press ‘NEXT’ to start the creation of the Backup Image.

Now when your computer gets an ‘Eldorado’ malware infection, or some other horrible virus you cannot get rid of, all you have to do is re-load this image onto your computer. It will then bring your computer back to the way it is right now. What that means is that any NEW stuff you add to your computer between now and then will be gone, but at least all that nasty computer virus stuff will be wiped away completely, something that is becoming more and more difficult to do as these viruses / malware become more complex.

Now THAT is something that will really help you, something BITCOIN won’t do for you.

Many people on this blog rank realtors somewhere south of syphilis. I have had good luck with them, but I don’t doubt the horror stories that blogdogs have told here. Maybe we get the realtors we deserve, just like politicians.

Bad money drives out good. Dumb customers enable crooked salesmen. I learned this in the sixties as a fledgling salesman for a US brand sewing machine store. Around the corner a competitor, let’s call them Japco, sold Japanese brands when the public still believed “Japanese” meant “junk”. Japco placed large newspaper ads picturing a sewing machine with top-of-the-line functionality for only $69 compared to our top model at $500. You couldn’t really buy this machine because Japco wouldn’t sell it to you at any price. They had only one of these “bargains” and it did everything as advertised, but it was toy-sized, about 9 inches long. It was simply the hook to bait and switch prospects to their $269 machine which was inferior to our basic $239 model.

Because the two stores were so close, I had a steady stream of wild-eyed people coming in waving the Japco newspaper ad. I would tell them exactly what Japco was doing, direct them to the Japco store and invite them to come back and comparison shop our base model. Not one of the ad wavers ever came back. Many paid the $269 to Japco. I know because the owner of my store envied the chutzpah of the Japco owner and swapped rum and stories with him every Friday night after the stores closed.

The Japco dude was sleazy but he could never have succeeded without the stream of willing dupes. I gave people a roadmap and they drove straight into the clearly marked gulley. I quit selling there because I realized that no amount of truth could fight this illogic. I am sure the same thing happened to honest realtors in our big cities as logic left the building.

That is a naive way of seeing it. As naive as seeing bitcoins good just for buying drugs.
If you give a monkey a gold watch it will use it to crack nuts. The watch is not less valuable it is just in the wrong hands.

What if I have goods and I trade them for bitcoins?
What if I sell my services (ex programming, translating documents, whatever you want).
I will have my account loaded with bitcoins without connecting the account with any bank account or piece of information that might identify me.

How do I spend them: pay others in bitcoins for services or goods that I need.

IMHO Bitcoin is a concept well ahead of its time.
While some of us might understand it and use it correctly most of us will just comment about it and look at it with suspicions .

#71 The American on 11.30.13 at 11:48 am
So, let’s get this straight. You sign up for a bitcoin account so you can begin amassing bitcoins and trading them for goods in an electronic environment. To load the account or purchase bitcoins, you must connect your existing bank account… An account that uses currency backed by a central bank. Then, you decide how many bitcoins you want in exchange for that central bank-backed currency at a rate that can be extremely volatile. In other words, the life of a bitcoin is a currency that itself relies on the existence of central-bank backed currencies. Wow, the irony and hypocrisy of it is overwhelming. Sheesh, someone is getting snowed, and it isn’t the powers that be at bitcoin. I’d be curious how those powers are spending their copious mounds of newly-found, central bank-backed currencies. Or, are they just buying more of their own poison and buying houses and cars. Yeah, didn’t think so.

The big banks waive transaction fee’s for students to train them to use plastic exclusively. However if you look at the deferred service charges its obvious to see that these same ‘convieniances’ will cost the ex students big time when they get out into the real world. What percentage of these barking seals will remain service charge slaves to the big banks? I would imagine that these banks have calculated that a large percentage will continue to pay through the nose for the csupposed convieniance of plastic transactions.

I for one have beaten it into my kids heads that plastic is a tool…not a convieniance….and to pay for bank shares…not products.

I remember hearing that the USA only has 20% of its currency in physical bills and coins.

USA has 100% of its currency in coins and bills. The rest of the dollars is bank credit. By fiat, bank created money has the same legal standing as central bank created money. That is a power chartered banks have. They just can’t create currency.

FWIW, anyone can create their own money. Things like Airmiles and loyalty points, just another word for money. Write a check, instant money, backed by the full faith and credit of… you… ie, worthless.

China is experiencing the largest conversion of currency into Bitcoin. Below is an argument as to why, from Jeff Berwick.

“Why are the Chinese gravitating to bitcoin? The reasons are obvious. China still has, for all intents and purposes, capital controls on the remninbi. And bitcoin creates an easy, nearly cost-free, instantaneous way to transfer funds worldwide. Adding to that, the Chinese government has not only been promoting its citizens on owning gold but has also begun accepting bitcoin as payment for numerous state entities such as the third largest mobile phone service in China, China Telecom.”

this is like saying governments can “regulate” torrents or mp3 downloads or any p2p file sharing.

Government regulates transactions, and so can trivially regulate Bitcoin. They will create whatever regulatory bodies they wish, and ultimately will police and enforce via the tax authority and audits, in the same way they can regulate and enforce transactions in Yen, Euros, Pesos, gold, or future considerations and trades-in-kind (ie barter). And if you wish to operate a legal business, you follow the rules of the land.

At 75: Recharts, it isn’t a naive way I am looking at it. It’s actually the exact way it works. You’re naive for not understand ding your bitcoins account, visa vi coinbank.com, is not connected to your existing bank account so that you can purchase those bitcoins in the first place. Check it out for yourself, and then get back to us.

Correction! My previous comment was meant for #85, not #75. Also, it is coinage.com. Not coinbank.com. Regardless, the account that Recharts refers to that holds his bitcoins is indeed permanently attached to your local bank account that funds the exchange of central-bank backed currency for the bitcoin. You simply cannot NOT connect your account to your bitcoin account.

Recharts says at #85, “What if I have goods and I trade them for bitcoins? What if I sell my services (ex programming, translating documents, whatever you want). I will have my account loaded with bitcoins without connecting the account with any bank account or piece of information that might identify me.”

Recharts, also, if you read the terms and conditions of the agreement for bitcoins, you will notice that they reserve the right to charge back against your local bank account (currency backed by central-bank), as well as reserve the right to deny an exchange of money for bitcoins at their sole discretion. This in itself demonstrates the belief the central-bank backed currency holds more intrinsic value than the bitcoin product that’s being pushed. Reality check.

Ugh. I despise iPad autocorrect. wwww.coinbase.com is the site to get your bitcoins going. Read the terms and conditions, and let us know how safe it sounds. In their own verbiage, they admit themselves it is, and I quote, “High risk.”

this is like saying governments can “regulate” torrents or mp3 downloads or any p2p file sharing.

Government regulates transactions, and so can trivially regulate Bitcoin. They will create whatever regulatory bodies they wish, and ultimately will police and enforce via the tax authority and audits, in the same way they can regulate and enforce transactions in Yen, Euros, Pesos, gold, or future considerations and trades-in-kind (ie barter). And if you wish to operate a legal business, you follow the rules of the land.

Even Al Capone went down on tax evasion.

You seem very stubborn.
The guy just explained to you that there is no way to enforce that sort of law.
With mp3 or torrents you can trace the person who is breaking the law by finding his IP

Now assume that I sell my services as programmer for bitcoins
I get paid in bitcoins and I need to pay for hosting for my site.
The hosting provider accepts bitcoins.
There is no way in this world that any government would be able who I am as long as I do not link any personal information to that transaction
The bigger the amount the higher the probability that they will locate you
For the average Joe this will not be a problem.

People seem to miss the whole idea: Bitcoin is a transit currency! Barter if you want ..or use it to transfer money around the world without having to pay banks, moneygram or anybody like them. It can also be a substitute for paypal is some situations.
It makes me laugh when I see some dude who is preaching “Do not invest in Bitcoins”

Have we all grown such retards to believe that the only way of making money is by “investing” aka speculating on the appreciation of whatever stock/currency/found or whatever? Where is this going to take us if we all put our money in the above and nobody adds value to this world by his work? How is this different from selling each other houses?

I do realize that this might sound like some sort of slogan for most of you. Most of you have became so entrenched in this sort of speculative way of investing that honest work and progress that take time sound like SF concepts for you.

You espouse ‘honest work’ and massively speculative Bitcoins at the same time? That’s funny. — Garth

#92 The American on 11.30.13 at 2:07 pm
At 75: Recharts, it isn’t a naive way I am looking at it. It’s actually the exact way it works. You’re naive for not understand ding your bitcoins account, visa vi coinbank.com, is not connected to your existing bank account so that you can purchase those bitcoins in the first place. Check it out for yourself, and then get back to us.

you seem to miss the power of comprehension and the capacity to read what is posted by your interlocutors.

I have clearly said that I am not going to buy Bitcoins. I am going to ask to be paid in bitcoins and spend it without being identified.

Above you have other examples why Bitcoin is useful but you chose not to comment on them. We are wasting time here..go ahead with your opinions and ignore me if you can not follow my logic.

Individuals who own a farm receive an $800,000 capital gains exemption when selling. Own the property jointly with your spouse? That equates to a $1.6M exemption.

Any land can be considered a farm, as long as the owner sells $10,000 worth of products derived from the land he or she owns in one year. That can be anything, from milk, wool, or crops such as apples or trees.

At #97: Recharts, this isn’t about whether or not YOU purchase bitcoins. You fail to see or acknowledge where that bitcoin that is paying for your good or service is coming from in the first place, taking into consideration how it was exchanged and backed by a central-bank currency. The buyer of your good or service had to acquire that bitcoin with his or her LINKED bank account.

The dollar is backed by the power of taxation. That’s all that’s required, and yet everything.

*****************************************

That claim has been repeated thousands of times. But is it logical?

When a dollar was backed by gold then you could say it was backed by the power to tax (and obtain gold).

Fiat currency has no set value in exchange. But central banks do try to keep dollars on a very slow glidepath of about 2% devaluation per year (inflation).

Last I checked taxation is not involved in any way in controlling inflation (devaluation of the dollar).

The government allows taxes to be paid in dollars (rather than grain) and that pretty much insures its acceptance by all of us. I believe the link of dollars accepted as payment of taxes explains how dollars first got accepted into circulation.

Fast forward a hundred years and we take it for granted that everyone in society will accept dollars in exchange for goods and services. We are reasonably confident that the value of the dollar will be maintained long enough for us to spend it or long enough to invest it for a return that will more than offset inflation.

We actually have no choice but to accept dollars in return for our own labour because that is the only thing you can easily spend to obtain what you need in our society. Try spending Gold or bitcoins at your grocery store. You can probably get by spending American dollars in Canada though I bet you will find a lot of stores will refuse them or will charge an exorbitant exchange fee.

In the end the dollar is backed by over a 100 years of custom and practice of using it. It’s value is more or less backed by no one but by all of us collectively. Sure the central bank tries to control the dollars devaluation over time and maybe that is a sort of additional backing. Nothing to do with taxation.

And once the practice of using dollars was extremely well entrenched, it was possible to remove the backing of so many ounces of gold. Dollars had achieved a sustainable momentum on their own and simply no longer needed backing by Gold.

The dollar is also backed by the rule of law that says that all debts can be settled with dollars.

The government could pass new laws and change the currency. So I suppose in that sense the government backs the dollar by simply not imposing a new currency. But unless there is some huge financial calamity the government would never change the currency.

The dollar for all intents and purposes is “backed” in the same way that Microsoft word and even the English language is “backed”. It’s backed by no one in particular but by everyone collectively.

AND, it’s all good, very good. Now let’s all just go and accumulate some more dollars!

”Any land can be considered a farm, as long as the owner sells $10,000 worth of products derived from the land he or she owns in one year. That can be anything, from milk, wool, or crops such as apples or trees.”

Ok Stickler, I have an idea. I buy a small treed acreage of mainly cedar trees averaging about 12” diameter and call it a tree farm for the purpose of producing kindling. I sell each package (1/3 c.f.) at $5.49 each. (like Home Hardware does).

So, all I would have to produce would be about 1820 pkgs per year to make that $10,000 which is not bad side money for an old retired guy. Say I decided to produce 10 pkgs per day that would mean I would have to work 182 days per year. I could probably produce that much in 4 hrs per day on average including the time cutting a splitting the blocks.

I could get about 120 bundles out of one tree so that would require that I harvest 15 trees a year or just over 1 tree per month. That’s not bad and it sure would keep an old guy in shape too.

So you finally resurrected a couple of neurons up there
You finally understood that I don’t have to buy bitcoins but now you place your bets on the other end of the transaction.
What does it take to make you understand that the other end can as well aquire bitcoins the same way.

And I guess that we will have to implant you more neurons so you can consider the other uses of Bitcoins suggested above.

Here is some help for your rusty mind:
The first bitcoins were gained by mining as far as I know. It all started from there. The miners needed webhosting. The webhosting company needed a programmer. I hope that asking you to follow the flow of bitcoins is not too much

You seem very stubborn.
The guy just explained to you that there is no way to enforce that sort of law.

Not stubborn. Just realistic. Paying for something with Bitcoins today is exactly the same as paying for something with cash yesterday. You think bitcoins are something new? Not really.

Your penny ante transactions and part time programming services do not bother anyone. Governments know well every business has a certain percentage of unreported cash transactions. Always has been. Always will be. Bitcoins will make that a little more convenient. If the black market grows to meaningful proportions, it will be easy to crack down on a huge portion of these transactions just by leaning on legitimate business to audit their supply chain. Most transactions are business-to-business and person-to-business. Nearly 100% of those can be monitored, regulated and taxed, today. Don’t mistake that just because they aren’t they can’t ever be.

comparing bitcoins to yen, euros, and pesos…is spurious and irrelevant.

Bitcoin aims to be money, a medium of exchange. The comparison is very apt.

OTOH, comparison of Bitcoins to torrents seems far fetched. What is the implication? That both are P2P? Well, oranges and apples are both fruits, so what. That torrent is anonymous and untraceable? Nope, any P2Per will show you a stack of emails from content owners telling them exactly what they were downloading. Failure to prosecute is a limitation of the laws’ (in)ability to deal with the technology, not with technical limitations. Governments don’t care, because they can shove copyright infringement under contract law, not criminal or tort law.

But hiding transactions and evading taxes puts you squarely in the crosshairs. I’m sorry if you see that as some sort of shadowy threat, as opposed to reality. Dreamers are always shocked when they wake up and reality reasserts itself.

I see that racism is still alive in this room with these comments that have an association with the Chinese, and this same stuff has gone on for decades with ethnic groups moving to Canada, as you take one at a time to blame them all for your woes in life, as it is them that is spoiling your party, and they are to blame for everything, so shame on you.

Some of you do such in a subtle way, to hide your true self that is most revealing to a trained eye, but I cannot be fooled. My background is Polish, English, and German; mainly Polish when all is said and done which is why I shop at a Polish deli and grocery store most of the time, so am I one to be trashed? Or is it the Chinese now? Any man who married a Polish woman in life has done well in my book; need I say more.

#115rosie "moving forward" in the knowledge that, "this won't end well" on 11.30.13 at 5:06 pm

USA has 100% of its currency in coins and bills. The rest of the dollars is bank credit. By fiat, bank created money has the same legal standing as central bank created money. That is a power chartered banks have. They just can’t create currency.

*****************************************

That is an interesting distinction. It may be that electronic deposits are essentially currency these days since they are spent directly.

People refer to all forms of money as currency though technically not all money is currency.

Another distinction is between Wealth and money. We tend to refer to wealth as money because it is measured in money. We say we have money in stocks. We don’t. We own stocks which are worth money but they are not money. We say we have money invested in a house. There is no money in a house. A house is worth money.

All money is wealth. Most wealth is not money. There is FAR more wealth in any economy than there is money. Money is the unit of measure, the unit of exchange and the short-term store of value. Wealth can exist without money (houses, farms) but is hard to measure without money.

I kinda sense from the previous day that you may be getting bitch slap weary Garth ol boy. Just a small token of gratitude from my end. Among all the Alcoa PQ, Black Friday insanity, Heinz, Sears, the Red Chamber. It’s always a good buffer zone when I come to Greater Fool. Don’t be intimidated by no fool(s).

I have not purchased a single bitcoin, and yet I have them in my possession as have ASIC bitcoin miner. In the future I may be paid in bitcoin for services rendered to some person or organization somewhere in the world. At some point in the future I may pay for a vacation with bitcoin as may grow tired from continuous mining. No “bank accounts” or currency exchanges have been involved as all transactions are denominated in bitcoin. Get it?

The argument that the currency is backed by taxation is known as Chartalism. Like everything in economics, it is disputed.

But it can be understood very easily. If the government stopped taxing, but continud to spend, then it would run a spectacular fiscal deficit. This would have severe consequences for inflation. The Weimar hyperinflation was largely the result of the Weimar Republic running a fiscal deficit of 50% of GDP.

I wouldn’t get too excited about bitcoin or equivalent replacing alternate currencies at the till. Most sites require 6 confirmations during a bitcoin transfer to ensure it was completed successfully, and this takes 1-2 hours in most cases. Hardly instant. I doubt we’ll be seeing crypto currencies replacing traditional payment systems anytime soon unless that gets addressed..

#112 Son of Ponzi — “How does Warren Buffett get richer and richer. […]”

Are you sure you’re not thinking of Carl Icahn?

Buffett’s holding periods vary, but are typically from years to forever. And you don’t have to buy stocks after he does, anyway. You can just buy BRK.A and be invested right alongside him, paying him what has to be the world’s lowest management fee.

CriminalMasterMind Mahmoud El-Meliguy’s MerryBand of BitCoinMiners abandon their GameConsoles and EschewVirtuality for a VeryRealDeal… Unfortunately, transfixed by TheExoticUndulations of Taheya Carioca, they fail to apprehend that BossMahmoud – having ruined yet another tablet computer with his PirateHook prosthesis – is not in a GoodMood.

The American. Ugh! Recharts STILL isn’t following your train of logic. I’d stop trying to show him the error of his ways. You cannot fix stupid. The American never made it about any side of the transaction. He was making a point as to what backs the value and exchange to make a bitcoin come to fruition. I get it, but Recharts is too devoid of intelligence to think that extra little step.

You can short anything that you can buy and sell. It’s just a contract between you and another party.
ie: You give me 1 bitcoin on loan and I sell it for $1200 immediately.
I hope it drops in price later.
When it drops in price, I buy it at $6 and give it back to you. Deal?

Son 1 finally ok
2 just came out of rehab. 15k hope it works
3 nice guy can’t close. Smart as shut.
Wife gamble holic.
Mother not far from the other side, a living corps.
DAD love this man, will go to about 115 butter can’t communicate with him no more.

Tax farm, I’m the dog. But I like being a dog. I need the distraction. Fighting a booze problem. It works for me.

Me,I have achieved every goal I put into the cross hairs.

The big prize.. Smokey the author…. Not going to happen no matter how hard I try.

My writing sucks. So disappointed I can’t get this shit together. It’s my last conquest. I can’t beat it.

#114 MarcFromOttawa – thanks for the comment and let us never forget the best restaurant in Ottawa called Mother Theresa on Somerset, and give my best wishes to Justin if you know him. I am sure that Daisy Mae will freak out lol.

“Did not the big banks just fail by gaming a regulated currency and banking system by establishing unlimited peer-to-peer relationships based on questionable assets as formal guarantees or no assets at all?” How did that “safe” system helped the average joe?

I thought this was a very pertinent comment today on Naked Capitalism.

I see that racism is still alive in this room with these comments that have an association with the Chinese
===================================

What do Canadians really mean by “racism” these days. A dictionary definition is, “hatred or intolerance of another race or other races”. Today its use seems to imply that you have been guilty of the bad manners of noticing that another person is not Caucasian. Having lived in Vancouver for thirty years, much of that time in Richmond, I can assure you that few white residents are racist in the first sense. It would be too exhausting to maintain the posture given that your neighbour is Asian and so are your co-workers and your kids’ school friends. To us “Chinese” is just a word like “Polish” or “French”. If we worry about Chinese buyers it is in the same way that people from Oregon used to fret about rich Californians buying up their state. They called it “Californication”.

Obviously non-resident buyers, Chinese or otherwise, affect prices by adding demand to the market place but they would pay less if they could. They are competing against house-crazed Canadians spurred on by incredibly lax government and banking policies.

#115 rosie “moving forward” in the knowledge that, “this won’t end well” on 11.30.13 at 5:06 pm
Bitcoins? Now this is an investment!http://www.rivercitiescondos.com

Truly mind blowing… on so many levels.

Just when you thought you have seen it all….. my bet is it won’t become reality, and if it does it will go broke before they get to haul cars by semi to the next town, this is someone’s pipe dream….. or crack dream.

@ #112 Son of Ponzi on 11.30.13 at 4:16 pm
How does Warren Buffett get richer and richer.
He buys lots of shares of company x.
Followers say: Warren is buying. We must buy too.
Price of shares goes up.
Warren sells.
Rinse, repeat.
———————

Fairly accurate, except the selling part. Buffett/Berkshire rarely sell, unless they become turned off by the management of the company, or see other factors that make the company less desirable. They’ve held Coke, American Express, Wells Fargo, etc. through many peaks and troughs.

What happens when the grid goes down during solar flares or just an aging electrical system brown out? That cash thing might come in handy. I’m sure the local food store will take your bitcoins, lol. Reading all the multiple stories of rampant theft of bitcoin accounts says it all, it’s a total scam.

So, we’re about a month away from another $5500 being added to the TSFA.

Right now, if you’ve averaged 10%/year (since they launched in 2009), that puts you just above $34k. 12%/year returns, and you’re above $36k. 15.6% a year, and you’re at $40k.

Garth – any chance you’ll be doing a post on TFSA strategies? You’ve consistently said to target growth vs. safety, but will that change as the contribution limits keep increasing? (i.e. will loss prevention factor in more?)

#129 Brad in Van on 11.30.13 at 7:52 pm
The American. Ugh! Recharts STILL isn’t following your train of logic. I’d stop trying to show him the error of his ways. You cannot fix stupid. The American never made it about any side of the transaction. He was making a point as to what backs the value and exchange to make a bitcoin come to fruition. I get it, but Recharts is too devoid of intelligence to think that extra little step.

You need help!

Who cares what backs the value of a currency if I don’t hold any of that currency longer than a couple of days???
I sell my services or merchandise at the price I want and after that I spend the bitcoins on something that I need.
or
I convert to bitcoins, send the money from C..uba to Canada and after that I convert the money to CAD/USD whatever without paying a penny for transfer fees. I might actually make money since either:
a) Bitcoins will appreciate
b) Bitcoins will depreciate but what I saved in bank fees will largely offset the depreciation

All in all it is a viable way to conduct business but not to hold your savings in this currency.

However I think the topic was if they would be able to enforce any law they would dream to, on bitcoin users.

So not only that you are wrong on both accounts but you are also unable to focus on what started all this discussion

“FBI recently shut down the most prominent Bitcoin commerce site, Silk Road, for selling illegal drugs, arrested its founder and seized 30,000 Bitcoins. In other words, Big Government and Big Law aren’t about to let a cryptocurrency circumvent all those regulations”

The authorities may have seized the virtual wallet (it’s just a file) with his bitcoins but one missing fact in this story is that, unlike traditional cash, investments or precious metals you need a password to open up the wallet to access these bitcoins — which I believe they haven’t.

It will take hundreds of years (if not thousands) for the authorities to crack that code. Do you really think this guy is gonna hand them over the key? And who knows how many virtual wallets this guy has… Bitcoin will prove far more difficult to regulate. How can you if you can’t access the virtual wallets?

The three independent cell phone companies, PublicMobile, Wind, Mobilicity taken over now by the Big 3 (Telus, Bell, Rogers). Bell Globemedia owns most every Tee-vee Newz station.

That independent bank, dING? Now owned by the Big 6.

We are seeing the world’s countries (by name only) carved up into their terminal states – resource extraction, sweatshop, narco state, corporate armies, and so on. Which is ours?

We were told the english-only facebook caused several ME countries to topple! (We know he has WMD, He’s killing his own people, he’s using gas etc etc. What happened to all that. Mission Accomplished,) Keep given billions to Haiti, Indonesia, maybe Phillipines as the armies and warships roll in…
Easiest. Coup. Ever.
What’s on tee-vee….

Ps. there no us and them. There never was. USA enjoying it’s dark base on Communist Cuba’s island. but you cannot fly there, Americans, wink wink. You too will be jailed.
Russia collaborated with USA space race all during the “cold war”. You really think they are still working on anti gravity experiments up there, 60 year later? Or the mother of all weaponry and surveillance systems? Our tax dollars, natch.

And this, could go on forever:

“The new order between the US and China was augured by Nixon’s visit to Beijing in February of 1972. A new understanding was in the offing. In January of 1974, Chinese warships sailed through the US 7th Fleet to seize the Spratly Islands from the South Vietnamese. This remarkable episode was ignored by the media at the time, and forgotten today, though it reveals the coordination between two erstwhile enemies. Tipped off by the US that it would soon hightail from Vietnam, China had to grab those islands right then, for had it waited another year or so, it would be stealing from its own allies, the North Vietnamese. … Still, American progressives thought they had a hand in ending that war. Thought is cheap! “

”Any land can be considered a farm, as long as the owner sells $10,000 worth of products derived from the land he or she owns in one year. That can be anything, from milk, wool, or crops such as apples or trees.”

Ok Stickler, I have an idea. I buy a small treed acreage of mainly cedar trees averaging about 12” diameter and call it a tree farm for the purpose of producing kindling. I sell each package (1/3 c.f.) at $5.49 each. (like Home Hardware does).

So, all I would have to produce would be about 1820 pkgs per year to make that $10,000 which is not bad side money for an old retired guy. Say I decided to produce 10 pkgs per day that would mean I would have to work 182 days per year. I could probably produce that much in 4 hrs per day on average including the time cutting a splitting the blocks.

I could get about 120 bundles out of one tree so that would require that I harvest 15 trees a year or just over 1 tree per month. That’s not bad and it sure would keep an old guy in shape too.

Would do you think of that idea?
———–
Sure, or you could sell one tree, call it organic hand raised and sell it to your own shell company for $11,000.

After reading about bitcoins, I just went on another nostalgia trip in the time tunnel. First stop, early 1980. I clearly remember a lot of great New Wave music like Rock Lobster by The B52s, or Cars by Gary Numan. “Here in my car I feel safest of all, I can lock all my doors it’s to only way to live in cars”. It was also when gold was at $800 per ounce (over 2 grand in today’s equivalent amount) and many people were lining up to buy it. Next stop, fall of 2011 when I just returned from Newfoundland when, just like 1980, gold was about $1900 an ounce and a lot of investors, oops I mean speculators, said it would go higher. Final stop, 2000. I recall hearing Wake up to the sun by Limblifter in that unusually wet summer (and the resultant worse than average mosquitoes), and hearing of the tragedy with the bad water in Walkerton. It was also the year when optimism about tech stocks was at an all time high. Some day I will probably be nostalgic about late 2013 when there was all this rave about bitcoins, and I wisely bought stuff that was on sale instead (see below).

@g, post #51;
You’re quite right, it is a joke. Why would you settle for 2.5% when you could get double that with REITs and preferred share ETFs, and triple with utility stocks like CSE, NPI, or TA? And now the punch line, the benevolent government gives you a dividend tax break if these investments aren’t in a TFSA or RRSP!

Cryptocurrency is an example of what can happen when a large number of young people have a broken system placed in front of them as an obstacle to living their lives happily and in peace; they find a way around it.

I only hope he had a backup for his wallet.
In that case the fact that police captured his bitcoins has ZERO value.

The problem wouldn’t be so much the capturing but the destroying of that amount of bitcoins
The destroying will implicitly rise the value of the remaining bitcoins :-) since there will be fewer coins in circulation.
The funny thing is that with police capturing his wallet and he pretending that he has no backup he now his money has a sort of alibi and he can get out of the whole thing and cash out later.

You have around 4700 questions related to bitcoin answered herehttp://bitcoin.stackexchange.com/
It is really instructive to read them in order to learn about bitcoins

Back in August, the German Finance Ministry recognized bitcoin as a “unit of account”, meaning it can be used for tax and trading purposes in the country. BTC China is now the world’s biggest bitcoin exchange, according to Bitcoinity.org, with more than 480,000 bitcoins having been exchanged on the site in the past seven days – 30 percent of the market share.

The Chinese exchange is now believed to have the highest number of registered users and received $5 million in funding this week from institutional investors Lightspeed China Partners and Lightspeed Venture Partners. Other major exchanges are located in Japan and in Eastern Europe.
Jon Matonis, the executive director of the Bitcoin Foundation and notable commentator on the cryptocurrency says that Atlanta-based Camp BX is the only functioning exchange in the U.S., and volumes are diminishing.

#158 Joe on 12.01.13 at 9:17 am
“FBI recently shut down the most prominent Bitcoin commerce site, Silk Road, for selling illegal drugs, arrested its founder and seized 30,000 Bitcoins. In other words, Big Government and Big Law aren’t about to let a cryptocurrency circumvent all those regulations”

The authorities may have seized the virtual wallet (it’s just a file) with his bitcoins but one missing fact in this story is that, unlike traditional cash, investments or precious metals you need a password to open up the wallet to access these bitcoins — which I believe they haven’t.

It will take hundreds of years (if not thousands) for the authorities to crack that code. Do you really think this guy is gonna hand them over the key? And who knows how many virtual wallets this guy has… Bitcoin will prove far more difficult to regulate. How can you if you can’t access the virtual wallets?

#169 Jimers on 12.01.13 at 12:10 pm
Cryptocurrency is an example of what can happen when a large number of young people have a broken system placed in front of them as an obstacle to living their lives happily and in peace; they find a way around it.

Money is wealth. How do Bitcoins find their way around that? — Garth

Jimers is right. The success of this currency is part due to manipulated fiat currencies part due to excessive fees and taxation

@Garth: Here is my postulate (like yours): bitcoins is wealth.
Or, when you say “money is wealth” I could reply: “prove it !”

We live in dollars, not bitcoins. This will not change for the rest of your life. — Garth

“Money is wealth. How do Bitcoins find their way around that? — Garth”

By taking away the ability to control currency valuation and inflation away from the powers that be. I think hoarding Bitcoins makes a lot of sense for civilians of unstable countries. Governments can keep printing money and devalue what you have (pre-WW2 Germany, Zimbabwae). Banks can suddenly take away your money (Cyprus). Physical gold can be stolen. Bitcoins are as safe as your ability to memorize your passphrase.

The volatility of Bitcoins will change if the currency gains a certain level of traction. Don’t forget: it took a while before online transactions and banking became ubiquitous.

We live in dollars, not bitcoins. This will not change for the rest of your life. — Garth

China and Germany tend to disagree. They did not seem to care about the Silk Road incident. Comments?

As Contrarian mentioned it takes time for adoption. Bitcoins recent soaring value is the very proof that the currency is getting traction. IMHO the more people will adopt it the higher the cost will be.
If today you pay 0.00126 bitcoins for a liter of gas tomorrow you might need to pay less just because more people adopted bitcoins.

Also in my opinion this is just the begining.
I already sent you a link to an electronic currency backed by gold.
There will be many attempts like this, all having behind cryptography, encryption and security schemes beyond the understanding of the common people. Some will succeed many will fail. Your skepticism is rooted in lack of trust and lack understanding of how this electronic currencies work.
As for their prospects to become a generally accepted currency …just wait. This will be clearer for all of us sooner that the RE market. To give you a hint. The progress in informatics is exponential

For those who think all parts of the prairie provinces are identical and every acre is of the same utility, do not come here. There is far too much land that will physically kill you by it’s harshness. Even if you durn fools have to pay a bit more, try to stay no more than a mornings walk from the nearest crick.

#174 tigerbaby: “the government doesn’t care about unlocking the bitcoin … they just want to put the criminal away

the problem with bitcoin is that by circumventing taxation, it makes itself the enemy of every government”

Circumventing taxation? AFAIK, there is no tax on trading bitcoins and any retailer would have to include all taxes in the price for an item paid in bitcoins. Same goes for an employer who decides to pay his workers in bitcoins. An investor who’s made out like a bandit would have to cash out at one of the very few canadian bitcoin exchanges which also doesn’t leave you circumventing taxes. The govt will have their audits of these exchanges which currently require all account holders to have high quality scans of their photo ID, plus home address & they do phone number verifications as well. Here’s the best part: they all require you to have a canadian bank account in order to cash out. Direct deposit style.

Anyone thinking this is a way to circumvent taxes is severely misinformed about the basics of bitcoin.

Islington and Bloor is hot. This ordinary 2 brdrm bungalow (40×120 ft lot) walk to Islington subway was listed at $728,888. holding off offers until today. A few days ago it sold firm for $822,888. They call it bully offers.

163$$$ smoking man? Certifacts are easy to get, and lets you open doors, you could never open with out them, and then you could be super smoking man! O maybe you are just joe six crack,a lot of sheep are counting on you!
If your so f$$$$ing smart get some certificates ! You say you are so smart, but no body listens to you , get your finger out of your … ! Your going to be a T. rex

How does Warren Buffett get richer and richer.
He buys lots of shares of company x.
Followers say: Warren is buying. We must buy too.
Price of shares goes up.
Warren sells.
Rinse, repeat.

*******************************************

When the topic of Warren Buffett and his incredible wealth comes up the reactions fall into two broad camps:

The first camp is Dismissive / disinterested / Jealous / Condemning. The reaction here is to claim/assume he made his wealth through a silver spoon head start and through various nefarious and immoral ways perhaps with much government help. Also in part through lucky timing of starting to invest in the wondrous 1950’s. Some in this camp simply lack any interest or any ability to invest.

The Second camp of Reaction is of admiration and great interest. This camp is impressed and wants to know more. This camp is especially interested in what they might learn from Buffett and how they could replicate, in some small way, his investing success to the benefit of themselves and their families.

Those of us in camp 2 are lucky that the vast majority of people are, and always will be, in camp 1. While it pains Buffett fans to read invective and jealous and dismissive and condemning comments about Buffett, the fact is that if everyone followed his methods then they would not work nearly as well. There would be fewer big losers in the market and fewer winners and most everyone would be closer to the average.

So thank you to all those in Camp 1. Look there is still plenty of room in Camp 2. It’s not too late. Any individual can join Camp 2 but the vast majority will stay in Camp 1.

Buffett has said that one of his greatest advantages in beating the market was that business students are taught that it can’t be done. He has an unarmed competition for the most part.

As lauded as he is in life, Buffett’s true genius will be fully recognized only after he is gone.

[CBC] – Stephen Harper to be feted for support of Israel at Negev dinner: Bird sanctuary in Israel to be named after Harper

…Harper will announce at the dinner he finally intends to make his maiden voyage to Israel, a country whose hardline prime minister, Benjamin Netanyahu, gushes openly with public affection for the friend he simply likes to call “Stephen.”

Sunday night’s tribute will also be about money. On this evening, the love for Harper will be in measurable in cold hard cash — the Jewish National Fund’s Canadian chapter plans to announce the tally of a fundraising effort to build a bird sanctuary in Israel to be named after the prime minister himself.

Josh Cooper, the chief executive of the JNF’s Canada branch, wouldn’t say how much money the organization raised, but did describe it as their most successful fundraising effort ever.

“I’m very excited. I’m glad to say this will be our best campaign in our 65-year history,” Cooper said in an interview.

Neither Cooper nor the prime minister’s spokesman, Jason MacDonald, would say what convinced the prime minister to lend his name to the Stephen J. Harper Hula Valley Bird Sanctuary Visitor and Education Centre.

It is a wetlands rehabilitation project that the Israeli government hopes to turn into a major tourist attraction — a surefire photo-op for Harper’s eventual trip to Israel.”…

[TheEconomist] – Bitcoin under pressure
Virtual currency: It is mathematically elegant, increasingly popular and highly controversial. Bitcoin’s success is putting it under growing strain

…”Bitcoin’s growing popularity is having other ripple effects. Every participant in the system must keep a copy of the block chain, which now exceeds 11 gigabytes in size and continues to grow steadily. This alone deters casual use. Bitcoin’s designer proposed a method of pruning the chain to include only unspent amounts, but it has not been implemented.

As the rate of transactions increases, squeezing all financial activity into the preset size limit for each block has started to become problematic. The protocol may need to be tweaked to allow more transactions per block, among other changes. A further problem relates to the volunteer machines, or nodes, that allow Bitcoin to function. These nodes relay transactions and transmit updates to the block chain. But, says Matthew Green, a security researcher at Johns Hopkins University, the ecosystem provides no compensation for maintaining these nodes—only for mining. The rising cost of operating nodes could jeopardise Bitcoin’s ability to scale.”…

I call that bulshit!
25 eagle road was listed on November 12 for 949K
It has not been publicly reported as sold
The price of the area is indeed 900K but the seller got the finger if it sold for 822K

#185 eddy on 12.01.13 at 2:30 pm
Islington and Bloor is hot. This ordinary 2 brdrm bungalow (40×120 ft lot) walk to Islington subway was listed at $728,888. holding off offers until today. A few days ago it sold firm for $822,888. They call it bully offers.

#185 eddy on 12.01.13 at 2:30 pm
Islington and Bloor is hot. This ordinary 2 brdrm bungalow (40×120 ft lot) walk to Islington subway was listed at $728,888. holding off offers until today. A few days ago it sold firm for $822,888. They call it bully offers.
——————————————————
When i saw what that house sold for I was amazed.
728,888 in my mind was a good price for the seller.
I just need some of that craziness to trend a bit further west and I’m outta here.

Pharmaceuticals want to maximize their personal profits which, of course, are totally contingent on sales and shareholder benefits, so everyone who works or has shares in pharmaceuticals is a Smoking Man. You should support them vice complaining.

And what would be wrong with psychiatrists, psychologists or scientists being Smoking Men and lying, cheating and stealing their way to personal success? Or are you suggesting that there should be human beings who are ethical and even act for the benefit of others, not just Smoking Men who lie, cheat and steal for themselves?

Hi! This is from another blog. I wonder what everyone thinks of this. I hear that there is very little chinese investment in Vancouver property etc. I just don’t know…
What do I asee?

A commentator on Vancouver Condo info…

I see a Government, bank and financial system, Bank of Canada who are determined to destroys savers and anyone who is trying to be sensible financially. They want the boat full before it sinks. Every last man, woman and child have to be loaded on board.

I see an open door policy for anyone in the world to come and plough their money into real estate and then leave it empty, using it as a safety deposit box for money they may have stole, certainly have not reported or paid any tax on to the CRA.

After all it is their right to leave it empty if they are from Timbucktoo or Toronto and who acres about families fighting to find somewhere to live.

I see retirees from other Provinces coming and buying having paid their taxes elsewhere but heading towards their costly medical usage here.

I am depressed that I have to take so long studying and analysing housing and it is causing my family so much anxiety.

I know that most landlords that I have rented from either local or off-shore do not declare their income to the CRA from legal or illegal suites, homes etc and yet no one seems to bothered, yet if as a salary earner I try any trick to escape the burden I will penalized.

I see no rise in interest rates and no more changes to the CMHC. I see no attempt to halt the flow of cash from China, or to stop the banks from lending on a pulse, or pushing HELOCS, telling you, you are richer than you think. I cannot drive around this city with encountering dozens of projects with flaggers telling me where to drive, when to stop, and that is what we have..a RE pumping city where there are lots of low skill jobs for flaggers, constriction and relators and the rest can fight over an assistant manager’s job at Starbucks or Chapters.

I see no end to this lunacy.

Blame foreigners, elders, government, landlords, banks — but not yourself — for a lack of possessions or accomplishment. The lament of a loser. — Garth

I call that bulshit!
25 eagle road was listed on November 12 for 949K
It has not been publicly reported as sold
The price of the area is indeed 900K but the seller got the finger if it sold for 822K

#185 eddy on 12.01.13 at 2:30 pm
Islington and Bloor is hot. This ordinary 2 brdrm bungalow (40×120 ft lot) walk to Islington subway was listed at $728,888. holding off offers until today. A few days ago it sold firm for $822,888. They call it bully offers.

Pharmaceuticals want to maximize their personal profits which, of course, are totally contingent on sales and shareholder benefits, so everyone who works or has shares in pharmaceuticals is a Smoking Man. You should support them vice complaining.

And what would be wrong with psychiatrists, psychologists or scientists being……….
___________________________________________
Zing!

No BS. They’re different houses. On Eagle the street numbers start at Bloor and get higher going south. Your information is correct, #25 didn’t sell, it’s on a 50 ft frontage with an addition

http://beta.realtor.ca/propertyDetails.aspx?PropertyId=13844858
My bad! You are right.
However I am not sure why this is so hot, the price of the area is 900-1000K
That house was listed low, they paid the land value, they will put it down and build another one for around 150K and there you go , the price of the area, what is so extraordinary??

Probably people with money who want insured mortgages for properties above 1M could still buy the land for using an insured mortgage and use HELOC to borrow more money to build the house.

Please dude not the Buffett argument again? How exactly does this work for retail investors? Its ironic how professional fund managers to the tune of 90% over the long haul who study this stuff for breakfast, lunch, & dinner can’t beat a simple benchmark!

Maybe they should take a look at index investing instead. Warren Buffett agrees.

It is making a lot of sense how laundered money could make its way into the money stream via restaurants, pubs, massage parlours, and gaming venues. In many cities these have become a booming business and probably the only viable business. then, why should real estate be any different?

Its ironic how professional fund managers to the tune of 90% over the long haul who study this stuff for breakfast, lunch, & dinner can’t beat a simple benchmark!

******************************************

There is NOTHING ironic at all about the average active investor not being able to beat the index.

It is in fact a mathematical tautology that this will be the case.

The index IS the average. All index investors should make the average. Ergo the average active investor must also match the index.

Any reports of the average index investor beating or trailing the index are the result of measurement error. The average active investor always makes the index every year, and also every day minute, hour and decade. Dr. William Sharpe pointed this out a long time ago.

After his higher costs, the average active investor trails the index by the amount of costs.

Buffett agrees, unless you have an edge use index investing.

Possibly professional active investors can beat retail active investors but so much money is in the hands of the big guys that there is not enough do it yourself money to beat.

But do not make the faulty logic leap of concluding that no active investor can beat the index reliably. Many active investors follow the voodoo of so-called “technical analysis” and growth stock investing. Value investors consistently beat them.

But 99% of investors will simply NEVER get what I am talking about here. So be it.

” Between 1634 and 1637, the early enthusiasm for the new flowers triggered a speculative frenzy now known as the tulip mania. Tulips would become so expensive that they were treated as a form of currency.””

BonusZen for HommeDuTabagisme, InkStainedAspirants & TrueCinephiles (this is how it’s done, SM – just try to be careful with your BoudoirScenes. LessIsMore.):

“The Conspirators. These are the incredible people in whose lives I deal. Desperate men and women… whose startling mission is to plot and scheme… connive and kill… [for] the world’s most guarded secrets!”

That means only convert if you’re a specker who understands the value could be $10,000 or zero next year. Also realize if Bitcoins actually do form a bigger part of ecommerce, they’ll end up being regulated and controlled by the same authorities that print pictures on paper and let you buy lunch with them.

On this Garth ,I think we can agree. At some point Banks and Governments will do a hostile take over of Bitcoin or destroy it.

So why do we even need money? Bitcoin is an example of assigning a value to something, that doesnt really exist. It has value because we give it value.

You said it a currency will be regulated, and controlled. but what if your currency, is not a currency at all ?

What if you put your “stuff” in a “bank” and that bank would honor any electronic transfer against it? What kind of stuff you say? Anything of any intrinsic value that can be validated… Bingo, untraceable electronic commerce.

thats all Bitcoin is… its a calculation base on the SHA hash algorithm built into hundreds of hardware encryption devices. A number is posted, and you try to figure it out… once you validate that your computer has figured it out, it resets to the next, and you get a bitcoin. (it has no real value, and burns up a lot of electrsimey to make it) My kid has his laptop running day and night, in a block that is mining a bit coin, so far he has got .00000001 of a coin, which is about 3 cents…

Why is there no talk of other crypto markets? BitCoin value was DOWN yesterday… don’t leave your investments there, instead trade your BTCs for an upcoming crypto market (via cryptsy)…. Smaller markets are going up by 1000% in a day (coinmarketcap). I bought Zetacoins (ZET) at $0.00004 per coin via cryptsy last week and the value today is .00001, making me just under $10k… grabbing some more today due to no sign of slow down, no press for Zetacoins yet so potential for huge returns is sky high, I see them at least $.10 next week. I’d advise you to get some now, or really regret it next week. At least take my advice and get in on another crypto before they all get sky high

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The views expressed are those of the author, Garth Turner, a Raymond James Financial Advisor, and not necessarily those of Raymond James Ltd. It is provided as a general source of information only and should not be considered to be personal investment advice or a solicitation to buy or sell securities. Investors considering any investment should consult with their Investment Advisor to ensure that it is suitable for the investor's circumstances and risk tolerance before making any investment decision. The information contained in this blog was obtained from sources believed to be reliable, however, we cannot represent that it is accurate or complete. Raymond James Ltd. is a member of the Canadian Investor Protection Fund.